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An Amazon In Paris

Champagne glasses clinked merrily along the banks of the Seine as Jeff Bezos worked to make a splash that was huge, yet somehow low-key. The founder of Amazon.com knew it would be all too easy for the world's biggest, brashest bookseller to offend the French. After all, Paris had greeted even Mickey Mouse as an Ugly American. So Bezos planned the bash for Amazon's launch in France carefully. He rented 11 barges, but moored them respectfully in the shadow of the spanking-new national library. He toasted Paris as the most beautiful city in the world, promised to respect French culture and wooed the local Internet glitterati by doing the official countdown in carefully rehearsed French. Yet between toasts at the Aug. 31 party, Bezos did not downplay his ambition to make Amazon a place to shop for "anything--and when I say anything, I mean anything--on the Net at any time."

Bezos has been the quintessentially aggressive American Netpreneur, losing money faster than he makes it in order to build a dominant global brand. Yet France may prove to be the last Amazon conquest for some time. Since the market shocks of April, Amazon stock fell by more than 60 percent to below $42 a share. Mounting losses and debts (now $1.5 billion) have raised increasingly tough questions about the Seattle company's relentless expansion. From its 1995 start in books, Amazon pushed into music and videos, and more recently into riskier ventures like cars, garden tools and furniture. Bezos first set his sights on Europe two years ago, launching Amazon Web sites in Germany and Britain. Amazon quickly became the No. 1 online retailer in both countries. France, however, could prove much tougher to crack: is simple brand-building a workable strategy in a country with cultural resistance to foreign brands?

The French launch was delayed two years as Bezos studied the treacherous business terrain and sought a way in. Back in 1981 Minister of Culture Jack Lang, a voluble critic of American cultural imperialism, pushed through a law designed to protect small booksellers and publishers. It prohibits book discounts of more than 5 percent, and to this day the French still take the time to buy their books from local brick-and-mortar stores. Lang's law will also impede Amazon, which wields deep discounts as its competitive edge. Says Gartner Group analyst Alexander Drobik, "I have to assume that Amazon people are betting that Lang's law won't last."

Bezos insists he can compete under French rules by providing better service and selection. Amazon's French site offers books, videos, compact discs and DVD movies--its widest inaugural offerings yet. Amazon also spent months poaching French-speaking staff from direct competitors like FNAC, currently the largest bookstore and online book retailer in France. Amazon lured recruits in part by offering "substantial stock options," which many Frenchmen still disdain as a crass tool of American capitalism. And that's not the only threat they see to French business etiquette. In a recent report, Goldman Sachs figures that Amazon's 24-hour service will be a particularly big advantage in France, where the 35-hour workweek has made some companies cut back their working hours, and most stores are closed on Sundays.

Amazon figures any cultural backlash won't last. The French embrace new technology as warmly as tradition, and had their own homegrown dial-up network, the Minitel, before there was an Internet. Nowhere in Europe is the number of Internet users growing as fast as in France, where it quadrupled last year to more than 12 million. By 2005, Goldman Sachs predicts, the French will account for 14 percent of a $175 billion e-retail market in Europe. Amazon senior VP Diego Piacentini says he's sure online commerce "will boom" in France, someday.

Competitors have been gearing up for Amazon's arrival. Responding to its inaugural offer of free 48-hour delivery, FNAC promised free delivery within 24 hours. "We are not going to make it any easier for them," says Patrice Magnard, president of A La Page, an e-commerce subsidiary of Wanadoo, France Telecom's Internet branch. A La Page plans to launch an improved Web site this week, and has set up a system that allows small booksellers to restock online and earn commissions on Web sales as well. All that is unsettling to Emmanuel Delhomme, owner of a 20-year-old Paris bookstore, Livre-Sterling. Surrounded by stacks of new and used books to which he has taped his personal comments, Delhomme says customers come back because they trust his recommendations. Entrepreneurs like Bezos, sniffs Delhomme, "come here with their blinking screens, but they don't understand that books require a certain environment." After Amazon, though, the French business environment will never be the same.